Apple Pay Details: Apple Gets 0.15% Cut of Purchases, Higher Rates for Bluetooth Payments

[Judas1]

One major reason that ppl use credit cards is because it's convenience (and collecting points).

Credit cards are much more convenient than going to the bank to pull out cash. And even so, I will still shop and eat out where its cash only if I enjoy going to that place. Whether they have one payment system versus another doesn't matter.

Not true. I would.

Not all stores carry the same things at the same price. Are you saying you'd stop going to a store that carried what you want because it doesn't have Apple pay? I would think of all the things to consider when buying something, payment system is not even in the top 10.

 

[Medic311]

But paying with the phone with Apple Pay is equivalent to paying with a credit card I don't think phones can completely eliminate credit cards, no matter what the market share of smartphones is, not every individual is going to have one, so cash and physical credit cards will still be there for a long time. What you are saying is that you will never use your iPhone to pay. Could we have this conversation in a couple of years? Perhaps you might have changed your mind on this subject by then

i cordially invite you to re-read what i wrote. i said i will pay with cash or credit card until i am told that i must use my iPhone, at which point it becomes a moot point since there won't be a choice

 

[Huracan]

Actually, the solutions around the fingerprint sensor are the ones more interesting to me. I have to confess, that before the 5S came out I had my doubts about the usefulness of the fingerprint sensor. I have to say that I am impressed with the engineering that Apple did, seamlessly integrating the sensor into the home button, the overall performance, etc. Not having to type a lengthy passcode again and again is a huge time saver for me.

I am looking forward to the upcoming IOS8 use of Touch ID with other applications.

I also like what I hear about Apple Pay so far. I'd like to see gas stations using this too at the pump. I think I'll be using Apple Pay, whenever and wherever is convenient, and I hope more merchants come on board. Full convenience comes from widespread acceptance.

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i cordially invite you to re-read what i wrote. i said i will pay with cash or credit card until i am told that i must use my iPhone, at which point it becomes a moot point since there won't be a choice

I think I got it the first time I read it, but perhaps I wasn't clear myself. I don't think you will lack that choice for decades to come. However, what I think will happen is the following:

In the next couple of years EMV cards will become ubiquitous. Unfortunately the extra security this cards bring is offset by the longer time it takes to process a credit card transaction. Compared to sliding the magnetic stripe, here they have to insert the card and wait a bit for the transaction to go through, then take the card out, not as fast and convenient as just sliding and giving back the card to the customer right away. Not a huge difference but I am sure it adds up over time, in particular with big retailers.

Now, if I am a typical customer and I go up to the register to pay and one solution gets me the receipt in 5 seconds, and the other one in 20 (completely hypothetical numbers). I am going to choose the one that gets me the transaction in 5 seconds, all the other factors (pricing, etc.) being the same.

Is this convenience factor what I think is going to make people change their thinking about this and probably warm them to the idea of paying with the phone, when they see other customers or friends being processed quicker at the register when paying with Apple ID. This is just my personal opinion.

 

[Medic311]

I think I got it the first time I read it, but perhaps I wasn't clear myself. I don't think you will lack that choice for decades to come. However, what I think will happen is the following:

In the next couple of years EMV cards will become ubiquitous. Unfortunately the extra security this cards bring is offset by the longer time it takes to process a credit card transaction. Compared to sliding the magnetic stripe, here they have to insert the card and wait a bit for the transaction to go through, then take the card out, not as fast and convenient as just sliding and giving back the card to the customer right away. Not a huge difference but I am sure it adds up over time, in particular with big retailers.

Now, if I am a typical customer and I go up to the register to pay and one solution gets me the receipt in 5 seconds, and the other one in 20 (completely hypothetical numbers). I am going to choose the one that gets me the transaction in 5 seconds, all the other factors (pricing, etc.) being the same.

Is this convenience factor what I think is going to make people change their thinking about this and probably warm them to the idea of paying with the phone, when they see other customers or friends being processed quicker at the register when paying with Apple ID. This is just my personal opinion.

it's quicker for me to:
- take out my wallet
- slide out credit card
- swipe or insert into reader
- select yes
- sign

THAN

- removing iphone
- swipe to unlock
- type in PIN
- open up Apple Pay (2-3 second wait)
- scroll through cards to the card i want to use
- select that card
- then wave device in front of reader


points go to Apple Pay for bypassing the "yes" and then "sign" steps of the transaction and if i happen to already have my phone out while i am in line bored which would eliminate several of the steps above. but then again, i could also have my wallet removed and credit card in hand as well.

i am not defending the magnetic strip, i am merely pointing out to the flawed presentation that Tim gave of an absolute worst case scenario (woman with massive purse, no reader on counter and must give card to cashier, magnetic strip worn out, etc).

on a side note - one should always carry a physical credit card and physical cash with them at all times. many of the services and entities you would rely on in an emergency will not accept Apple Pay and some don't even accept credit cards. will that change? sure, at some point. but i don't see myself any time soon able to use Apple Pay to "bump a payment" with the tow truck driver's reader

 

[melevittfl]

- removing iphone
- swipe to unlock
- type in PIN
- open up Apple Pay (2-3 second wait)
- scroll through cards to the card i want to use
- select that card
- then wave device in front of reader

But you've added several steps that aren't there.

It's actually
- remove iphone
- hold top of phone near NFC terminal
- hold finger on touch id sensor to confirm

The NFC terminal will tell trigger the payment without you having to unlock the phone or open an "Apple Pay" application. The payment is made with a default card which you don't have to select for every transaction.

 

[John.B]

i cordially invite you to re-read what i wrote. i said i will pay with cash or credit card until i am told that i must use my iPhone, at which point it becomes a moot point since there won't be a choice

And when the next Target or Home Depot or wherever gets hacked for their credit card data, they'll have your info.

it's quicker for me to:
- take out my wallet
- slide out credit card
- swipe or insert into reader
- select yes
- sign

THAN

- removing iphone
- swipe to unlock
- type in PIN
- open up Apple Pay (2-3 second wait)
- scroll through cards to the card i want to use
- select that card
- then wave device in front of reader

Obviously, you've never used Passcode.

 

[Huracan]

it's quicker for me to:
- take out my wallet
- slide out credit card
- swipe or insert into reader
- select yes
- sign

THAN

- removing iphone
- swipe to unlock
- type in PIN
- open up Apple Pay (2-3 second wait)
- scroll through cards to the card i want to use
- select that card
- then wave device in front of reader


points go to Apple Pay for bypassing the "yes" and then "sign" steps of the transaction and if i happen to already have my phone out while i am in line bored which would eliminate several of the steps above. but then again, i could also have my wallet removed and credit card in hand as well.

i am not defending the magnetic strip, i am merely pointing out to the flawed presentation that Tim gave of an absolute worst case scenario (woman with massive purse, no reader on counter and must give card to cashier, magnetic strip worn out, etc).

on a side note - one should always carry a physical credit card and physical cash with them at all times. many of the services and entities you would rely on in an emergency will not accept Apple Pay and some don't even accept credit cards. will that change? sure, at some point. but i don't see myself any time soon able to use Apple Pay to "bump a payment" with the tow truck driver's reader

Thanks for your detailed and courteous reply, this is greatly appreciated in times when people tend to be at each other throats in forums It's great that you described what you think is the process of phone payment. From what I read in Apple's website the process is simpler than what you describe.
* Take iPhone
* Move it close to credit card reader
* place finger on Touch ID fingerprint sensor
* No need for PIN, or unlock, just wait for confirmation beep and vibration.
* Done!

This is obviously if you pay with a default card (which is my case). If you have to choose another card, then I guess the steps that you describe would have to be done and the convenience goes down quickly from there if you need to involve Passbook Still great if for some reason you forgot your wallet at home For me the greatest convenience is if I can pay with my default card, without having to unlock or turn on the screen, just get the phone close to the reader and use Touch ID.

 

[John.B]

This is obviously if you pay with a default card (which is my case). If you have to choose another card, then I guess the steps that you describe would have to be done and the convenience goes down quickly from there if you need to involve Passbook

To pick an alternate card, you'll just swipe up from the bottom of the screen to pick the card you want to pay from before you put your finger/thumb on the Touch ID sensor. Easy peasy.

 

[lolkthxbai]

But effective October 2015, retailers themselves are responsible for credit card fraud for swipe-and-sign type credit card transactions. http://blogs.wsj.com/corporate-inte...15-the-end-of-the-swipe-and-sign-credit-card/

They're going to have to implement something instead of swipe-and-sign. If not NFC, then... what?

Like I've said elsewhere, Apple's timing for supporting NFC payments is impeccable. After the sporadic initial NFC deployments, but a year before the EMV deadline. Right as merchants need to ramp up.

Okay, so Best Buy says it will opt out of Apple Pay right? That means they won't implement NFC POS at their stores but they can still implement Chip & Sign compatible terminals to satisfy the new regulations for credit cards. However, it would be dumb to do so because they could easily do both at the same time.

 

[sero]

Apple, which requires me to update my CC info to download a free OS update through the app store… Screw their giant CC database. No way I'm dumping all my card numbers into it.

 

[PadreQuevedo]

My Chase Slate credit card has NFC built-in. Instead of swiping I just tap on NFC enabled machines. Which is cool.

 

[Mac32]

Why do you care?

No matter how this will be handled and who pays the procentage fee (the user or the bank), this is going to be a more expensive service than bank cards with Apple's policy of a 0.15%+ cut.

Edit: I know found out that VISA and Mastercard gets a 2% cut, and it's the stores that have to pay the fee - resulting for sure in higher prices for the customers. Apple's 0.15% fee seems rather small by comparison. I say, go Apple. Surely this will be a better solution than using a VISA card. Thumbs up. (Yes, I can change my mind I guess... ;-)

 

[cmaier]

Seen at the ATM this morning...

Banks are really aboard...

 

[Medic311]

Thanks for your detailed and courteous reply, this is greatly appreciated in times when people tend to be at each other throats in forums It's great that you described what you think is the process of phone payment. From what I read in Apple's website the process is simpler than what you describe.
* Take iPhone
* Move it close to credit card reader
* place finger on Touch ID fingerprint sensor
* No need for PIN, or unlock, just wait for confirmation beep and vibration.
* Done!

This is obviously if you pay with a default card (which is my case). If you have to choose another card, then I guess the steps that you describe would have to be done and the convenience goes down quickly from there if you need to involve Passbook Still great if for some reason you forgot your wallet at home For me the greatest convenience is if I can pay with my default card, without having to unlock or turn on the screen, just get the phone close to the reader and use Touch ID.

thank you for bringing to my attention that the first several steps are not necessary due to the quick-access function. i'm definitely eager to give this a try, but unfortunately until Discover is added to the list i will only be using it for my Visa card for gas stations (when Apple Pay comes to gas stations, if ever) and my Amex for Costco (when Apple Pay comes to Costco, if ever)

 

[gnasher729]

wrong.

Please fix your post, or we need to request that downvotes are activated just for your post.

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With a ponzi scheme like this, no wonder apple's stock has gone up

You seem to have no idea what "Ponzi scheme" means. Merchants will love Apple Pay because their cost will be going down.

The fact that Apple's payment charge is based on a % cut of the purchase means I'll never use this service. That's just too greedy. It should have been a very small static fee like how VISA charges used to be. No thanks, Apple.

Seriously, VISA charges either a fixed percentage, more than 10 times higher than Apple, or for small amounts a fixed fee.

 

[bstpierre]

Wow...do you have an economic sense at all? No matter how this will be handled and who pays the procentage fee (the user or the bank), this is going to be a more expensive service than bank cards with Apple's policy of a 0.15%+ cut. That's why I won't use Apple's method.

No it is not going to be more expensive. It is going to be cheaper. The banks are going to eat the 0.15% because it is less money than the fraud they have been eating.

 

[Anitramane]

I’d like if america stopped using that magnetic strip P.O.S and went over to using a chip like the rest of the world.
Much more secure.
http://www.npr.org/blogs/alltechcon...etic-strips-how-u-s-credit-card-security-lags
Of course it won’t make crime disappear, but it will lower it and Apple won’t have to get extra money from you and you don’t risk losing your arm in dark alleys during the night.

 

[AllieNeko]

Okay, so Best Buy says it will opt out of Apple Pay right? That means they won't implement NFC POS at their stores but they can still implement Chip & Sign compatible terminals to satisfy the new regulations for credit cards. However, it would be dumb to do so because they could easily do both at the same time.

Best Buy has had terminals that support contactless and chip for ages. Chip has never been enabled. Contactless was, but they disabled it years ago due to a fee and control (debit routing) dispute with Visa. They're not "opting out of Apple Pay" - they're opting out of accepting contactless due to their dislike of Visa policies for contactless debit.

Presumably, they'll enable the chip readers before Oct 2015 if they're still in business.

----------

No it is not going to be more expensive. It is going to be cheaper. The banks are going to eat the 0.15% because it is less money than the fraud they have been eating.

Maybe for now, but why would that be a benefit to them once chip acceptance is mandated by Oct 2015 (and if you don't accept the chip as a merchant, you eat any fraud).

----------

However, if you use the correct amount (0.15%), Apple gets 1.5 billion from 1 trillion of charges via pay. That's hardly pocket change.

Over time, this is going to be a significant revenue stream for Apple.

I fully expect the amount to go down next October/as counterfeit card fraud goes down. This high of amount is likely only short-term to get Apple to promote contactless (thus helping to reduce counterfeit card fraud).

 

[wizzerandchips]

This has to be the way forward..think of all that plastic being mnf. as long as it secure I can't see the argument against it.

 

[s2mikey]

Theft will become more interesting now. The thieves will steal your phone and cut your finger off. Then, they can go wild without ever having to show any ID.

Just saying.

 

[eric_n_dfw]

Compared to Chip & PIN (EMV) where you have to remember different PIN's for each card (unless you unwisely set them all to the same PIN), Apple Pay is much simpler. I'm still unclear on what direction the US merchants are being pushed though, to Chip & PIN or Chip & Signature. The later is no more-or-less convenient than mag-stripe + signature.

For those of you outside the US, where Chip & PIN is common, do you find it annoying to keep track of multiple PIN's?

FWIW, if I could use my iPhone 5s to do Apple Pay, I'd be all over it but I'm not that interested in a bigger phone nor paying $350 for the 1st generation Apple Watch so I guess I'll sit back and watch for now.

 

[doasis23]

thank you for bringing to my attention that the first several steps are not necessary due to the quick-access function. i'm definitely eager to give this a try, but unfortunately until Discover is added to the list i will only be using it for my Visa card for gas stations (when Apple Pay comes to gas stations, if ever) and my Amex for Costco (when Apple Pay comes to Costco, if ever)

https://www.youtube.com/watch?v=Iod3zO0LAUU&list=PL90351CC5E699D982

Here is a video that shows exactly how it works.

 

[MyopicPaideia]

Apple, which requires me to update my CC info to download a free OS update through the app store… Screw their giant CC database. No way I'm dumping all my card numbers into it.

Wrong. Pay doesn't save your credit card info at all, ever. It receives a token from your CC issuer when you set up the card, and then saves the token in the secure element. Your CC number is never even saved on the device, let alone on an Apple server somewhere. The only card info Apple has is the one attached to your AppleID.

 

[MyopicPaideia]

Compared to Chip & PIN (EMV) where you have to remember different PIN's for each card (unless you unwisely set them all to the same PIN), Apple Pay is much simpler. I'm still unclear on what direction the US merchants are being pushed though, to Chip & PIN or Chip & Signature. The later is no more-or-less convenient than mag-stripe + signature.

For those of you outside the US, where Chip & PIN is common, do you find it annoying to keep track of multiple PIN's?

FWIW, if I could use my iPhone 5s to do Apple Pay, I'd be all over it but I'm not that interested in a bigger phone nor paying $350 for the 1st generation Apple Watch so I guess I'll sit back and watch for now.
Image

Chip & PIN is sooo much better than Chip + Signature. With the latter I assume that you still have to give the card to the cashier? All the PoS terminals here in Sweden, from 7Eleven to the Apple Store, have a chip reader facing the customer and you just insert, enter the PIN and then confirm the price. Then take the card out of the reader when the transaction is approved. The cashier never touches your card.

Remembering PIN's just becomes a part of daily life.

Again it seems a matter of leapfrogging back and forth. The USA has been stuck on the old crap magnetic strip for decades, while Europe has had Chip + PIN forever, but not much contact-less (with credit and debit cards). Now the USA will probably be ahead on contact-less merchant PoS payments for awhile. Since we already have Chip + PIN, there may be less incentive for the European banks to get behind this right away. Also with the already well imbedded Chip + PIN PoS infrastructure, that doesn't include NFC, there is no real motivation for the transition in that direction with an already decently secure system.

Sort of like how Europe was way ahead with 3G forever, but then the US was/is ahead on LTE.

Non-Merchant PoS NFC is almost ubiquitous in Europe though, refillable bus and train cards, office park/building access, etc.

Another thing I don't quite understand is what the difference is between using Pay online or at a store. The process, and the security level is exactly the same. The same biometric measure is used to secure the transaction. and the same tokenisation system is used. I wonder what the motivation behind not allowing online transactions using Pay as "card present" was for the CC companies??

 

[John.B]

Chip and PIN only solves part of the problem. POS terminals still store your card info and PIN number, which can still be hacked.